Gokul V.K. is a software engineer based in Chennai. He has not started his tax planning so the current outgo is quite high at Rs 37,158. However, Taxspanner estimates that he can bring down his tax by over Rs 27,000 by tweaking his pay package and investing more in tax saving instruments. Gokul’s company allows some rejigging of the pay structure. If the company puts 10% of his basic into the NPS, his tax can come down by Rs 9,000. If he gets certain tax-free perks such as reimbursements for phone bills and newspapers, he can reduce his tax by another Rs 3,600.

However, putting 10% of the basic in NPS will reduce his take home pay. Also, the investments in the NPS will be locked till he is 60. Gokul has not fully utilised his Sec 80C limit. If he invests Rs 65,000 in an ELSS fund, his tax will reduce by around Rs 8,000. If he buys health insurance for himself and his mother, he can save another Rs 1,500 in tax.

He should also invest Rs 50,000 in the NPS to claim deduction under Section 80CCD(1b). It will cut his tax by another Rs 5,150. As mentioned earlier, NPS is not a liquid investment and his money will get locked for the long term.